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Fidler Firm Under Fire for Lawsuit Lending

According to an article in Crains New York Business, Brooklyn Councilman Lew Fidler’s part time job with a lawsuit lending firm could become a campaign liability as he seeks Carl Kruger’s former Senate seat.

Colorado Attorney General John Suthers has sharply criticized Fidler’s firm, Law Cash, for charging rates as high as 215% annually in for a loan against future awards. Lawsuit lending preys on vulnerable consumers and encourages frivolous litigation. Aggressive efforts by the lawsuit lending lobby (American Legal Finance Association) seek to legitimize the practice in states across the nation.

A recent article about a Brooklyn man who fell victim to this deceptive practice brought light to this major issue as a problem in our state.  Joseph Gill borrowed $4,000 from lawsuit lenders to pay for medical expenses and surgeries in 2006 after a false arrest left him with serious back injuries.  Now five years later, the verdict came in Gill’s favor and the lenders are looking for $116,000 to pay back the $4,000 in loans; The interest of the two loans being 58% and an outrageous 70%.  While such numbers may seem unreal or illegal, they are common in lawsuit loans.

LRANY is committed to fighting the abusive practice of lawsuit lending and stop it’s damaging effects on consumers and our civil justice system.

 

Brooklyn Man Bitten by “Lawsuit Loan Shark”

The New York Post recently published an article highlighting a case in which a Brooklyn man, Joseph Gill, was the victim of an attack by lawsuit loan sharks.  Gill borrowed $4,000 from lawsuit lenders to pay for medical expenses and surgeries in 2006 after a false arrest left him with serious back injuries.  Now five years later, the verdict came in Gill’s favor and the lenders are looking for $116,000 to pay back the $4,000 in loans; The interest of the two loans being 58% and an outrageous 70%.  While such numbers may seem unreal or illegal, they are common in lawsuit loans.  Firms will insist on a rundown of the case from the plaintiff’s attorney, and only lend to those who have the highest chance of winning. Not only does this violate the client’s right to confidentiality, but the potential for cooperation between attorneys and lawsuit lenders could lead to serious conflicts of interest.

“Advancing money against future lawsuit winnings is a murky and largely unregulated business”, the NY Post states.

Lawsuit lenders insist that because borrowers are not required to repay if they lose their case, their products are not loans, but rather, investments. In this way, they currently sidestep New York’s consumer protection laws. There are no regulations that govern the rate of interest that lawsuit lenders may charge, which can exceed 100% annually. In New York, an annual rate higher than 16% is considered usury.

Such financing companies essentially engage in payday lending for litigation. They seek out consumers who have filed lawsuits and offer to pay them up-front money in exchange for a percentage of whatever award they may later receive in their lawsuit – a percentage which increases over time. Litigation companies prey on vulnerable consumers – people who are often injured and unable to work, with no financial support, and desperate for cash. These companies force the consumer to agree to unfair terms that ultimately result in the consumers giving up a big piece, if not all, of any award they may receive for their injuries.

LRANY is committed to fighting against this deceptive practice to protect consumers, businesses, and taxpayers and prevent the corruption of our civil justice!

Lawsuit Lenders on the Prowl During the Holiday Season


A recent press release on Market Watch revealed that consumers looking for extra cash during the holiday season may be lured into taking out a “lawsuit loan.”  The manipulative lawsuit lending industry provides a way for plaintiffs to borrow off their potential settlements, prior to and judgment actually being made – but at a steep cost.


Lawsuit lenders insist that because borrowers are not required to repay if they lose their case, their products are not loans, but rather, investments. In this way, they currently sidestep New York’s consumer protection laws. There are no regulations that govern the rate of interest that lawsuit lenders may charge, which can exceed 100% annually. In New York, an annual rate higher than 16% is considered usury.


Such financing companies essentially engage in payday lending for litigation. They seek out consumers who have filed lawsuits and offer to pay them up-front money in exchange for a percentage of whatever award they may later receive in their lawsuit – a percentage which increases over time. Litigation companies prey on vulnerable consumers – people who are often injured and unable to work, with no financial support, and desperate for cash. These companies force the consumer to agree to unfair terms that ultimately result in the consumers giving up a big piece, if not all, of any award they may receive for their injuries.


LRANY is working to stop this deceptive practice to restore fairness to our judicial system.



Crain’s New York – Legal tactic or loan sharking?

“The Lawsuit Reform Alliance of New York is fighting Sean Coffey’s new venture to fund high-stakes litigation cases in exchange for a percentage of the lawsuits’ winnings.

“This is lawsuit loan-sharking, plain and simple,” said Tom Stebbins, executive director of the alliance. He added that “alternative litigation funding” skirts the state’s consumer protection laws and will drive up the number of frivolous lawsuits.

Mr. Coffey, a class-action specialist and Democratic attorney general candidate in 2010, did not return calls for comment. His investment management firm has yet to fund a case.”

Read more from Crain’s New York

Former AG candidate now a lawsuit lender

Sean Coffey, a lawyer who last year ran unsuccessfully for New York’s Attorney General in the Democratic Primary, has co-founded a firm that will fund lawsuits.  This is further proof that relationship between financing firms and lawyers must end.

The LRANY has taken a strong stand against this practice, often called “Non-recourse civil litigation financing”, or more commonly, lawsuit lending.

Such financing companies essentially engage in payday lending for litigation. They seek out consumers who have filed lawsuits and offer to pay them up-front money in exchange for a percentage of whatever award they may later receive in their lawsuit – a percentage which increases over time. Litigation companies prey on vulnerable consumers – people who are often injured and unable to work, with no financial support, and desperate for cash. These companies force the consumer to agree to unfair terms that ultimately result in the consumers giving up a big piece, if not all, of any award they may receive for their injuries.

 

Read more of the press release that LRANY released earlier today in response to a post in the TU Capitol Confidential.

 

The Dangers of Lawsuit Loan Sharking

Over the next several months you will be hearing a lot about Lawsuit Loan Sharking.  LRANY strongly opposes this practice in New York.  Please take a look at this fact sheet to learn more.

Look to this page and our other LRANY communication resources for information on attempts to make Lawsuit Loan Sharking  a more accepted practice in New York.